Ask the Expert: What's really happening in the China market

Ask the Expert is a DAIMANI Journal series where we discuss how the coronavirus has impacted specific markets for official VIP Hospitality and related services, and what are the challenges and timelines for industry recovery.

Greg Turner was headhunted to lead the USD110 million Shantou University Sports Park project donated by the charitable foundation of fabled Hong Kong investor Li Ka-Shing [pictured above with Turner]. Following the vision laid out personally by Mr Li Ka Shing, it was Turner’s business plan for all parts of the multi-function facility (6,000-seat arena, 170-room hotel and Olympic-sized swimming pool) that helped make the project the sustainable success it is today.

Turner’s Shantou-based company Shenzhen High Performance Event Management is the first wholly foreign owned enterprise in China to obtain a cultural performance license (营业性演出许可证) allowing him to develop a unique expertise in dynamic marketing, ticketing and event execution.

The DAIMANI Journal: When you look back to the end of last year and start of this year, do you remember the first time you heard about coronavirus? What were those circumstances, how did you come across the news and what were your initial thoughts?

TURNER: The first rumblings about a new SARS-type virus came out around Christmas time. But everything was being downplayed for the first few weeks. Then I remember one night just before the Chinese New Year holiday officially started: Shenzhen was already pretty much empty as people went back to their hometowns and my wife and I were enjoying a quiet walk back from dinner. We stopped at a few small pubs along the way and I remember thinking how much I was looking forward to the peace and quiet of the holiday. It was basically the next day that everything got shut down and what started as a relaxing break turned quickly into a dystopian sci-fi movie.

Like with most things, my wife was much more on the ball about this than I was. She had her order in for masks and hand sanitiser when the news first started to come out so luckily we were relatively prepared. But I still remember around 10 days of getting up every day and making the trek around to local pharmacies to see if they had any news masks arrive. Those were some pretty bleak days around the middle of January.

And when did you first get that terrible feeling that this was a game-changer?

Those days in the middle of January were pretty intense but I think it was all so surreal I didn't have time to really consider the big picture. Then towards the end of January we had a snowboarding trip planned for Japan. In our preparation for the trip we had to deliver our cat to my wife's friend in the neighbouring city of Dongguan. By that time the country was moving into full lockdown and checkpoints were set up between cities. The personnel at the checkpoints were all decked out in HazMat suits and would check your travel history, temperature and record your licence plate and passport number. While the personnel were very friendly, it just added to the dystopian feeling of it all and I was left wondering how much further it would go.

But the moment it really hit me on the China side was once we were in Japan and were on a video call with my wife’s family who were in lockdown at their apartment in her hometown. My wife’s father is very proud of China and generally considers it the safest place in the world. But on that call he told me not to bring his daughter back to China and keep her outside until things were more stable. That was a pretty powerful message and I decided right there that we’d head back to Canada right after the Japan trip ended to wait things out.

So after 15 days in Japan then three weeks in Canada, we made it back to Shenzhen. Upon our return, everything was still under lockdown. Only essential services were available and masks and temperature checks were ubiquitous. But there was a sense that the worst was over and China had the virus under control. It was quite a shock then to see how much trouble some Western nations had with it once outbreaks started taking hold. I remember when the NBA shut down their season, that was a moment I thought the response was going to get serious in the US, but apparently not everyone had that same idea.

Some of us have lived and worked through pandemics like SARS and could draw experience from that. Was there anything in your past professional experience or life that allowed you to better understand what was happening, what the immediate future was going to look like and the decision-making process you witnessed?

I was already living in China when the SARS pandemic broke out in Hong Kong. My life in Beijing had earlier gone through a little bit of a tough patch so I made the decision to pack up and try my luck in Shanghai. After securing a verbal agreement for a marketing job, I packed my bags and boarded a Friday-night overnight train to Shanghai. By the time I was scheduled to visit my new company’s office and sign my contract, the Beijing government had announced they had 200+ unreported cases and had no idea how many further cases the city had. So because I had just arrived from Beijing, my offer disappeared and I spent my first three months walking the streets of Shanghai, with no opportunity of getting a new job because I had lived in Beijing. But in those three months I also built a very deep love for Shanghai and it set the foundations that let me settle and start building my career in the sports and entertainment business.

This obviously left a pretty big impression on me so I had some sense of how the pandemic could affect business. I actually found myself in a very similar situation in that I had recently moved to Shenzhen and was in the initial phases of getting my own company set up when the coronavirus broke out. But this time I had a little more experience so was better able to ride out the (much bigger) storm.

If you could go back and there was the opportunity for a do-over for any of the specific decisions that were made by governments worldwide, inside the PRC and within our industry, what would those decisions be and why.

I've been in China long enough to know that giving Monday-morning quarterback advice to government decisions isn't the most useful exercise. Instead I'll say that I believe the best, most lasting results have come from those willing to swallow the medicine, regardless of how bitter, and force themselves to get through the tough times of lockdowns, masks, social distancing and listening to those who have built a career in understanding how to deal with pandemics. This pandemic is just too invasive to think cutting corners will produce positive results.

In our industry, and amidst a welter of webinars and online content, which companies and individuals do you think have really stood out for what they’re saying and getting the tone right? Who or what is your trusted go-to for content about the coronavirus?

I read a lot and from all different sources. So it's difficult to really identify any one source that I find rely on. One article that really helped me frame why lockdowns were so important at the start of an outbreak was from VOX about the importance of flattening the curve.

I've found a lot of positive industry voices coming out of the UK. My friend Paul Jones over there has built a great support network for event professionals dealing with job loss. Another group that does a good job curating info and sharing is the We Will Recover team. My friend Dave Wakeman is involved with them and they have some really great resources for the industry.

You are at the centre of a lot of information about the industry in the PRC. Please can you give us your ‘helicopter view’ of important differences in response from one country to another, what has surprised you positively and alarmed you the most, and what do people outside the PRC not still understand about your domestic market in the post-coronavirus world?

The speed and depth of response here really made a big difference. It took a few weeks before officials were really able to understand what they were dealing with, but once the real risk to people’s health and safety was understood, the government took drastic action to limit and control the spread. Probably even more important was that I would guess 99.9% of the people here accepted how important it was they follow the guidance and take personal responsibility for their role in managing the spread. The first three or four months in China were really tough and scary. But now the country has emerged from the other side and that’s what is allowing us to start organising 20,000-person music festivals.

Ticketed live events were obviously one of the first industries to be affected and we’re likely to be one of the last to recover. What are the particular areas of vulnerability that you are concerned nobody is thinking about in the PRC or outside the PRC? What pain levels or pinch points are we still not seeing or understanding?

Ticketed events in China, whether culture or sport, are tightly controlled by the government, and the bureaucracies for both are very conservative and risk-adverse. This has resulted in a drag in bringing these events back to life relative to other consumer driven parts of the economy like F&B or shopping. From my perspective, they could safely speed the reopening up a little and thereby save some of the 13,000 companies who have gone out of business in the events industry in China since the start of the year. If not, we're going to start losing talent soon and that's going to set back the industry development in the long term.

Internationally, I have the exact opposite worry, that too many organisations are rushing back and acting as if their events operate independently of the daily life we all face. Your venue and event management team can have the best COVID management plan, but unless the community you're trying to serve has the virus under effective control, outbreaks are going to happen regardless of how strong your controls are.

With regards to Beijing’s decision to cancel all events this year bar those related to the 2022 Olympics, why did this seem like it was only a binary choice – yes, no? Do you think a halfway option limited crowds, as with concerts and the CFA and CBA was ever considered and if it was why was it not successful? What does that tell you about the decision-making process next year about the return to Live Events?

The bureaucracy in charge of sports is very conservative. In their risk/reward calculation, it's just not worth bringing in athletes/officials/audience from overseas and risk causing a new outbreak. That's a career-ender right there. You've got to look at the work scope of the General Administration of Sport and understand what their work performance is judged by, and international events are just a small part of it.

Having said that, I'm feeling confident that next year will be better. The 2020 Asian Beach Games originally scheduled for November this year have already been reconfirmed for April 2-10, 2021. I think we’ll see more events being confirmed for the first half of 2021 in the next month or so. The local officials want to do international events, they just don’t want to take the responsibility of COVID-related problems without cover from their leaders.

In terms of PRC customers travelling overseas to official VIP Hospitality events, are you a V, U or L-shape believer and why?

I think that depends more on how things go in other countries. Right now, for any US-bound travel, I'm a definite L-shaped believer, more because of the lack of national-level control of the virus than any of the political issues. But for other countries, I could see a U- or even V- shaped rebound, especially for an event like the Tokyo Olympics. China is starting to open for some business travel to low-risk countries and affluent Chinese people are going to want to continue being seen where the action is. So once the flood gates open I think you’ll see some fast results.

Both from the perspective of your customers and from someone inside the business, how will the new PRC normal be different from the old normal?

This virus has reinforced the idea to a lot of people here that China is ready to be a global leader. In terms of the live-events business, I think we’ll see more progress on growing domestic leagues and events as the government has been pushing hard for that even before the virus hit. I also think we’ll see growth shifting from Shanghai and Beijing to new markets like the Greater Bay Area, Hainan and Chengdu as local investment follows some very ambitious government policy objectives.

We are all in business so it can often seem like it’s only about the money. But what instances have impressed you the most, both within the industry-response and your own life, where people or events proved it wasn’t just about the money.

Internationally, I was impressed how much the industry led the initial response in the US. As I mentioned, I believe it was the NBA postponing their season that woke a lot of people up that maybe the virus did need their attention. Then I was also impressed at how various teams and organisations like Live Nation stepped up to support those furloughed or out of work industry workers. It hasn't been a perfect response, but it's been encouraging. Also how some industry individuals have offered up their time to help those needing someone to talk to or find support.

Locally here in China, I've been really impressed by the individual commitment everyone has given to making sure the virus was controlled early. It's easy for someone uninformed to chalk that up to government control, but even China's government can't control every action of 1.4 billion people. Instead it was really people grasping their importance to support the country, their family and their communities.

What are your top five wishes for the second half of 2020? What do you hold on to that gives you cause for optimism?

1.  Everyone remains safe and we as a global community emerge from the pandemic soon.
2. Regardless of what the recovery looks like, I hope to see our industry engage the great parts that make it so strong, like creativity, hard work and ability to overcome adversity, to find its way forward.
3. International travel starts to loosen up and we can start seeing some international events again.
4. The US and China quickly resolve their political issues and learn how to cooperate in a more mutually beneficial way.
5. I'm able to help more companies navigate their way through China’s confusing live event industry and I see my business take real root.

In the PRC, we read a lot about ‘wolf warrior diplomats’ and this has created its own opposite reaction in parts of North America, Australia and Europe, particularly with reference to the origins of the coronavirus. How real an issue is the political ‘name calling’ and trade tensions for PRC consumers trying to decide where or if to travel overseas and how might this impact the offer made by official VIP Hospitality rightsholders?

This is a complex question so I'll make the fatal mistake of giving my best shot at a simple answer.

This might surprise some people, but I think most Chinese consumers are better able to separate politics and their personal interests than a lot of western countries right now. They live daily with a government they don't always agree with but also understand there isn't much they can do about it, baring completely tearing their lives apart. They also understand the huge positive change of the past 40 years and how much better off they were than their parents and how much better off their kids will be than they are. So they are willing to let governments play their games with the understanding their own living standard will continue to improve.

But there is a very firm red line drawn with even perceived insults against China as a country. National pride runs deep in Chinese people, both for the past 40 years and 4,000 years of history. My best advice for anyone in the industry looking how to deal with these issues is keep your organisation out of any kind of political talk, make sure your athletes, officials, sponsors, and other stakeholders understand what's at stake with even offhand remarks and give me a call if you have any questions.

And if there is one specific official VIP Hospitality experience you think you and a loved one have earned because of everything 2020 has thrown at the business, what would be the event and why?

Tough question. As a Canadian, I'm already thinking gold medal game for men’s hockey at Beijing 2022. But I've also always been intrigued by Augusta and the Masters even though I'm not a huge golf fan, and it would be a great event to enjoy with my dad.